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Grains get crushed

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Jun 2, 2014

Corn and wheat prices have been plummeting recently, an unwelcome sign for Midwestern farmers who have been busy planting corn and are preparing to harvest their winter wheat.

Nearly 90% of this year’s corn crop has already been planted, which is pulling prices lower as the young plants are off to a good start. Corn that will be harvested this fall is traded on the futures market as December corn, which fell to $4.59 per bushel on Friday, a three-month low.

Meanwhile, US winter wheat, which is largely harvested during June, is in middling shape due to the ongoing drought across the Great Plains. Nonetheless, prices for wheat have been dropping as European-grown wheat is flooding the market, dragging prices for July wheat under $6.30 per bushel, the lowest price since early March.

Unlike corn and wheat, soybean prices have held strong, with July beans trading Friday at $15.00 per bushel. Strong Chinese demand and a slow South American soybean harvest have been boosting prices for US beans.

Euro Continues Slide

The euro currency fell after news broke of rising unemployment in France and Germany, the European Union’s two largest economies. In addition, ongoing fears that a trade standoff with Russia could hamper the European economy have been weighing on investors. These factors are leading to increased expectations that the European Central Bank will release a new round of stimulus to bolster ailing economies.

One likely result of ECB stimulus measures would be lower interest rates, which make euro-denominated investments less attractive. Fear of lower interest rates encouraged a sell-off of the euro currency, which traded underneath $1.36, the lowest price in over three months.

Gold Hammered Lower

Gold prices melted to a three-month low on Friday, dropping to $1241 per ounce.

There has been little friendly news for gold bulls recently, as the crisis in Ukraine is waning after a relatively smooth election last weekend, and there are few signs of inflation in the United States. Additionally, some traders have seen more enticing investments in the stock and bond arenas, which has caused many investors sell off their gold holdings, leading to a $150 price decline over the last few months.

Opinions are solely the writer's. Walt Breitinger is a commodity futures broker in Valparaiso, Ind. He can be reached at (800) 411-3888 or www.indianafutures.com. This is not a solicitation of any order to buy or sell any market.

This is not a solicitation of any order to buy or sell, nor does it provide any recommendations in regard to the market. Information contained herein is believed to be reliable, but cannot be guaranteed as to its accuracy or completeness. Past performance is no guarantee of future results or profitability. Futures and options trading involve substantial risk of loss and is not suitable for all investors. Clients may lose more than their initial investment.

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Opinions are solely the writer's. Walt Breitinger is a 40-year veteran commodities broker with Paragon Investments, a commodity futures brokerage firm based in Silver Lake, Kansas. He and his son, Alex, can be reached at 800-411-3888 or indianafutures.com.